Saturday, January 16, 2010

China's largest e-commerce firm Alibaba Group, in which Yahoo Inc (YHOO.O) owns a 40 percent stake, has called the search giant's comments on Google (GOOG.O) "reckless".

Alibaba Group, which runs Taobao, China's largest online retailer and China's largest e-commerce website Alibaba.com (1688.HK: Quote, Profile, Research), has had a testy relationship with Yahoo ever since the departure of Yahoo's former chief executive Jerry Yang.In China, companies are mindful to tread carefully on topics sensitive to the Chinese government. This is why firms like Baidu Inc (BIDU.O), NetEase.com (NTES.O) and Sina (SINA.O) self-censor without much prodding from the government.

"Alibaba Group has communicated to Yahoo! that Yahoo's statement that it is 'aligned' with the position Google took last week was reckless given the lack of facts in evidence," the firm said in a statement on Saturday.

Yahoo said last week it stood aligned with Google that attacks on company networks are deeply disturbing and violations of Internet user privacy is something that must be opposed.

This is after Google announced last Tuesday it may exit the China market after it suffered a sophisticated cyber-attack on its network that resulted in the theft of its intellectual property.

STAKE SALE?Yahoo folded its search business and invested $1 billion in Alibaba Group in 2005 in exchange for a 40 percent stake. The U.S. search giant sold its stake in Alibaba.com (1688.HK) late last year, surprising Alibaba executives near their 10th-year anniversary.

The latest statement from Alibaba highlights the growing friction between the two sides. It is believed that Alibaba wants Yahoo to sell its stake in the group, but Yahoo has said publicly it views its now multi-billion dollar stake in Alibaba as a key investment in China.

A source familiar with the situation also said on Saturday that Yahoo knew it had been a target to sophisticated Chinese cyber attacks on U.S. corporations before Google alerted the company to them, but chose to remain silent after its bigger rival went public.